About midnight I lost power. The power was down for half a day.
This is as soon as I could get back up.
I have no financial reporting I trust.
Europe seems to be subsumed by Austrian orthodoxy.
There is no point in arguing with a religious zealot.
All that can be done is replace them.
The Euro and probably the European Union will not survive.
We have seen deflation due to a burst bubble.
The other way to deflate a currency is a tax generated surplus.
The "99%" have no surplus to tax. If they are squeezed by taxation they will disappear into the grey market. 10% off for cash.
The way to grow the economy is to put money at the bottom of the economic pyramid. It will generate demand. The top of the pyramid will just bank the money. They are already in surplus.
The place to get that money is government debt. Business will not borrow without demand for product.
If you read Krugman this is not news.
http://krugman.blogs.nytimes.com/2012/04/28/four-fiscal-charts/
"April 28, 2012, 11:00 am
Four Fiscal Charts
Here’s an exercise I did for my own edification — and to prepare for questions on book tour — but others may be interested in the results. I wanted a simple answer to the people who always insist that we must be having massive fiscal stimulus because we have a big budget deficit; my answer is that the deficit is a result of the depressed economy, but how do we show that without getting too much into the weeds?
Well, here’s a quick and dirty approach. Suppose that spending and revenues would, in the absence of the slump, have risen at 5 percent per year — roughly GDP growth plus inflation, and actually a bit slower than actual spending growth (6 percent per year) from 2000 to 2007. With this assumption, I can draw three charts for the federal government (using CBO data) and one for state and local (using FRED) that, I think, tell the story.
First, most of the surge in the federal deficit is about plunging revenue. In the figure below, the “No recession” line shows what would have happened if federal revenue had grown 5 percent per year after 2007:
That’s about an $800 billion per year shortfall.
What about spending? Well, it is higher than you would have expected in the absence of the slump, by around $300 billion:
What’s that $300 billion about? Well, they’re mainly about the category CBO calls “income security”, mainly food stamps and unemployment insurance:
Income security spending is, of course, strongly related to the state of the economy. So are some other forms of spending — Medicaid, of course, but also things like disability insurance, where people on the cusp are more likely to seek the benefits if they can’t find work.
So basically, the federal deficit is all, yes all, about the recession and aftermath.
And meanwhile, there has been austerity at the state and local level (calendar years here instead of fiscal, but that’s not crucial):
So the reality is that we have deficits because the economy is depressed, but relative to previous policy we’ve been imposing fiscal austerity, not stimulus."
Well, here’s a quick and dirty approach. Suppose that spending and revenues would, in the absence of the slump, have risen at 5 percent per year — roughly GDP growth plus inflation, and actually a bit slower than actual spending growth (6 percent per year) from 2000 to 2007. With this assumption, I can draw three charts for the federal government (using CBO data) and one for state and local (using FRED) that, I think, tell the story.
First, most of the surge in the federal deficit is about plunging revenue. In the figure below, the “No recession” line shows what would have happened if federal revenue had grown 5 percent per year after 2007:
What about spending? Well, it is higher than you would have expected in the absence of the slump, by around $300 billion:
So basically, the federal deficit is all, yes all, about the recession and aftermath.
And meanwhile, there has been austerity at the state and local level (calendar years here instead of fiscal, but that’s not crucial):
http://krugman.blogs.nytimes.com/2012/04/28/where-the-productivity-went/
"April 28, 2012, 10:02 am
Where The Productivity Went
The answer is, it’s two-thirds the inequality, stupid. One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.
What this says is that widening inequality makes a huge difference. Income stagnation does not reflect overall economic stagnation; the incomes of typical workers would be 30 or 40 percent higher than they are if inequality hadn’t soared."
http://krugman.blogs.nytimes.com/2012/04/28/euro-austerity-continued/
Euro Austerity, Continued
Martin Wolf does his own version of my austerity versus growth analysis; he uses a different measure of austerity and a different time period, but the results are basically the same. Martin’s graph, which would be unreadably small in this format, is here.
To focus things a bit, here’s a reduced set of countries using the Wolf definitions of growth and austerity:
Basically, what we’re seeing is the contrast between the forced-austerity periphery and the core. Notice, also, that tales of German austerity are greatly exaggerated; the Germans haven’t actually done much real austerity, just as we here haven’t done much real stimulus.
You can try to make excuses here, but imagine what the austerians would be saying if the correlation went the other way."
To focus things a bit, here’s a reduced set of countries using the Wolf definitions of growth and austerity:
You can try to make excuses here, but imagine what the austerians would be saying if the correlation went the other way."
http://krugman.blogs.nytimes.com/2012/04/24/austerity-and-growth-again-wonkish/
"April 24, 2012, 7:08 am
Austerity And Growth, Again (Wonkish)
Kash has a nice summary of what the new Eurostat numbers on budget balance mean. So I thought I’d do a bit more.
What Eurostat gives us are budget balances in euroland as a percentage of GDP. Kash focuses on the change from 2009 to 2011 as an indicator of austerity, although as he notes, falling GDP means that the true amount of austerity in places like Greece is much bigger than that.
Let’s run with that, and create a crude adjusted measure of austerity. I calculate the amount the budget balance “should” have changed as 0.45*(growth from 2009 to 2011 – 4). In this formula, 0.45 is the average share of government revenue in GDP in the euro area, so this is a rough measure of revenue effects of growth; I’m just assuming that 4 percent would represent normal growth for a euro country over 2 years. And I estimate austerity as the difference between the actual change in budget balance and this predicted change.
So this is a kind of Cary Brown computation. It’s also sort of what Alesina and Ardagna do, but applied to a period in which big moves in deficits are clearly driven by austerity policies, so the many objections to their work don’t have their usual force.
What do we get if we plot this estimated austerity against the actual change in real GDP 2009 to 2011?
An apparent multiplier of around 1.25, not out of line with other estimates.
It’s worth noting that this also implies that 1 euro of austerity yields only about 0.4 euros of reduced deficit, even in the short run. No wonder, then, that the whole austerity enterprise is spiraling into disaster."
What Eurostat gives us are budget balances in euroland as a percentage of GDP. Kash focuses on the change from 2009 to 2011 as an indicator of austerity, although as he notes, falling GDP means that the true amount of austerity in places like Greece is much bigger than that.
Let’s run with that, and create a crude adjusted measure of austerity. I calculate the amount the budget balance “should” have changed as 0.45*(growth from 2009 to 2011 – 4). In this formula, 0.45 is the average share of government revenue in GDP in the euro area, so this is a rough measure of revenue effects of growth; I’m just assuming that 4 percent would represent normal growth for a euro country over 2 years. And I estimate austerity as the difference between the actual change in budget balance and this predicted change.
So this is a kind of Cary Brown computation. It’s also sort of what Alesina and Ardagna do, but applied to a period in which big moves in deficits are clearly driven by austerity policies, so the many objections to their work don’t have their usual force.
What do we get if we plot this estimated austerity against the actual change in real GDP 2009 to 2011?
It’s worth noting that this also implies that 1 euro of austerity yields only about 0.4 euros of reduced deficit, even in the short run. No wonder, then, that the whole austerity enterprise is spiraling into disaster."
One reason things are not worse economically are the military budgets of the last ten years. The production there pays people at the bottom of the pyramid.
My brother the EE sent me a copy of Legacy of Ashes.
I have not gotten deeply in to it.
My quick look at the introduction combined with my awareness of our politics has made me afraid.
My ignorance of the political "play" in the world is more profound than I believed.
I think I know more of the events than most.
I do not understand the causal relationship of the events.
Much of events seem to be the result of powerful persons acting in ignorance.
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